Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of labor are needed to make each watch. Factory workers are paid $7 each hour. Variable manufacturing costs are $4 per labor hour. Fixed overhead cost total $5,000 each month. If Feline wanted to manufacture 500 watches in the month of September, what should it budget in overhead costs

Total budget overhead cost = $15,000

Explanation:

Given:

Each watch take time = 5 hour

Variable cost = $4 per hour

Fixed overhead cost = $5,000 per month

Total number of watches = 500

Find:

budget in overhead costs

Computation:

Total variable cost = Total number of watches × Each watch take time × Variable cost  

Total variable cost = 500 × 5 × $4

Total variable cost = $10,000

Total budget overhead cost = Total variable cost + Fixed overhead cost

Total budget overhead cost = $10,000 + $5,000

Total budget overhead cost = $15,000

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